With OPEC members and friends (and the ever growing energy journalist cohort) meeting in Vienna, it seems apt to look at the economic adjustment of some of the participating oil producers. While most would gain from rising prices. Russia, and Iran, smaller GCC countries (Kuwait, UAE and even Qatar) as well as some U.S. producers would look to be the relative winners. The slowbleed of capital outflows, external and fiscal deficits are likely to moderate across most of the other producers including Saudi Arabia, Oman, let along more vulnerable countries like Nigeria, Angola which are still struggling with the aftermath of their FX policies. With U.S. and global interest rates edging up, expect continued rate and sovereign risk divergence.
I spent some days last week in Waterloo, Toronto and Ottawa to give some presentations and try to better understand Canadian trade policy. With Canadians playing a starring role in the previous week’s excitements in Vietnam the week before last on TPP-11 or the Progressive Comprehensive TransPacific Partnership (CPTPP), it seemed a good time to better understand how the Canadians are viewing the trade outlook and especially its “progressive” element. A joint trade symposium from CIGI, the University of Ottawa and the University of Calgary provided a very timely place to discuss.
Interlocking nodes of trade talks in Asia, the Americas and Europe, suggest trade and investment policy will dominate much of the diplomatic energy over the next year, suggesting that trade and investment risks will remain relevant for markets perhaps more so if asset valuations become more stretched. Ongoing trade reviews, especially NAFTA and disputes are perpetuating uncertainty for business making it harder to plan. This uncertainty, along with rather limited changes in macro policy in major global economies (across the G20), suggest a cap on global growth and global trade acceleration next year. And a downside risk from a major trade measure (more likely from Washington) remains in the frame.
What I took away from my time in Ottawa was that Canada’s “progressive” trade agenda is still being defined in terms of scope, that Canada is slowly working towards some regional Plan Bs, which also extend to the security front, where the Caribbean and Venezuela are concerned. These will likely do more to extend investment and other economic norms, but will be harder to enforce as long as U.S. policy is moving to challenge those norms.
With my transition away from Roubini Global Economics, it seems like a good time to test out a new platform to share insights on macro, markets and political risks - especially those that don't lend themselves to tweet storms.
While I never had my own blog for long, writing for the Roubini Economonitor was one of the best parts of my early years as an analyst and it gave me the opportunity to write in some higher profile places at times. Over the years, most of my analysis moved behind a paywall. Meanwhile, my public consumption of and contribution to economic debate migrated to twitter and I both consumed and wrote on blogs much less.
Hence today's experiment. I'll remain on twitter (@reziemba) for short recommendations, Instagram (@reziemba) for interesting photos along my journey, but will try to use this platform to knit some of it together.
I anticipate writing about the intersection between political and macroeconomic risks relevant to global markets as well as the tradeoffs of national wealth and liability management, topics that have absorbed much of my career. Odds are - China, the other BRICs, the GCC will get a lot of attention as will sovereign funds and trade policy.
We'll see how it goes. Thanks for joining me on the journey.
Rachel's musings on macroeconomic issues, policy and more.